Financial Partnership to Provide Access to Credit for Botswana’s Cutting and Polishing Industry

July 25, 2016

Loan will anchor supply chain in country catalyzing local economic growth

Gaborone, Botswana - The Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today signed a $125 million loan guaranty which will help Botswana develop its diamond industry in a sustainable manner that will promote local job creation and diversified economic growth. Historically, diamonds mined in Botswana and elsewhere would be sorted, marketed and manufactured in other countries. Bringing these value-adding functions into Botswana has been a priority of the country’s Government, and the guaranty will help provide the financial underpinnings for this economic development strategy to succeed. The $125 million represents the first tranche of a broader $250 million OPIC loan guaranty program for these purposes.

OPIC signed the $125 million loan guaranty with Barclays Bank of Botswana, a subsidiary of Barclays Africa Group Limited, together with Lazare Kaplan International (LKI) acting through its subsidiary Botswana Finance LLC. The agreement will establish a revolving framework facility in which OPIC will share the credit risk.

“This project will provide critical support to an industry that is central to Botswana’s economy and a key source of job creation,” said James Polan, OPIC Vice President of Small and Medium-sized Enterprise Finance. “Bringing the larger supply chain into Botswana will have a huge impact in local communities across the country.”

This project aims to facilitate further lending to diamond manufacturing and polishing companies with operations in the Republic of Botswana. This will support economic diversification by providing cutting and polishing companies in Botswana with access to long-term financing, as well as develop the country’s financial sector. Given the critical importance of the diamond industry to their economies, Botswana and other southern African countries have implemented local beneficiation policies that require additional economic benefits to be derived from their diamond resources. Access to finance is an essential component of the development of the diamond manufacturing sector.

Barclays Bank of Botswana is the first lender under the broader $250 million loan guaranty program, and additional lenders may join the program in the future. This tripartite partnership reflects Barclays Bank of Botswana’s commitment to the local diamond industry alongside OPIC’s commitment to economic development and LKI’s longstanding record of investment in Botswana. This OPIC-supported loan will make it easier and more efficient for the local cutting and polishing facilities to borrow money locally, and add value to the supply chain in Botswana by creating employment opportunities and growth to this sector.

Reinette Van Der Merwe, Managing Director of Barclays Bank of Botswana, says it was imperative that Barclays finds a sustainable way to grow lending to the sector. “Diamonds have transformed Botswana’s economy from the poorest country in the world before independence to one of the fastest growing economies.”

Leon Tempelsman, President of LKI stated “We are honoured to be associated in this undertaking with partners as strong as Barclays and OPIC, who not only hold the highest standing in capital markets but share our vision of the diamond industry: one which supports constructive economic growth in the countries and communities where it operates, and adheres to the utmost standards of accountability and integrity. We commend both OPIC and Barclays for this substantial commitment to the next stage of development and diversification of the economy of Botswana, a nation which has been a beacon of good governance and responsible stewardship of minerals resources, and which we have been proud to be associated with as an investor and friend, for some four decades.”

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About OPIC: OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help address critical development challenges and in doing so, advances U.S. foreign policy and national security priorities. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets, catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, political risk insurance, and support for private equity investment funds, when commercial funding cannot be obtained elsewhere. Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers.

All OPIC projects adhere to high environmental and social standards and respect human rights, including worker's rights. By mandating high standards, OPIC aims to raise the industry and regional standards of the countries where it funds projects. OPIC services are available for new and expanding business enterprises in more than 160 countries worldwide.

About Lazare Kaplan International: Botswana Finance LLC is a subsidiary of LKI, the project sponsor and investor. LKI is a New York-based global company with over 100 years of participation, and a long record of innovation, in the diamond industry, including leadership in promoting transparency and accountability within the trade. It was involved in the design of the Kimberley Process, the industry’s first attempt to establish verifiable chains of custody for diamonds internationally; was the first company specialized in diamond trading to raise funding in public capital markets; and the first also to become a participant in the UN Global Compact, the world’s largest social corporate responsibility initiative.

About Barclays Bank of Botswana: Barclays Bank is a leading commercial bank in Botswana. The company employs 1,200 people with 41 branches and 115 ATMs throughout the country. The bank opened its doors in Botswana in 1950 and continues to grow 60 years later. We are a publicly listed blue chip entity on the Botswana Stock Exchange, with a strong citizen shareholding. Euromoney and EMEA Finance have voted us the Best Bank in Botswana for more than 3 years in a row and we have been recognised for significant contribution in the implementation of vision 2016 goals.

Barclays Bank makes a positive impact in the communities in which we operate. Barclays believes that, as one of Botswana's oldest corporate citizens, we have a responsibility towards improving the quality of life of citizens. Barclays takes pride in the Barclays F. G Mogae scholarship fund, which is just one of the ways we touch the lives of the people around us.